Leading investment consultant Willis Towers Watson has told asset managers to prove they deserve their pay as market returns evaporate and fearful investors switch from equities to bonds.

Senior investment consultant Jeremy Spira said: "Managers are able to pay their staff handsomely and still achieve high margins and this is, by definition, funded by their clients,"

"We would contend that if this state of affairs is to persist, managers need to be called to account to demonstrate the value they are adding for the fees they are extracting."

Willis Towers Watson's views carry weight not only as an adviser to funds worth $2.3 trillion but as an asset manager in its own right, managing $75 billion on a long-term basis. Spira said fee levels come under greater pressure when returns fall, because they soak up a larger proportion of returns.

Nathan Gelber, investment chief at consultancy Stamford Associates, said: "All too often, manager remuneration is not aligned with the interests of the end-user."

He said retail investors suffered from not being supplied with relevant data: "It's high time we saw data on fees and costs displayed with the same prominence as health warnings on the front of cigarette packets."

Since the credit crisis, asset managers have enjoyed a steady improvement in pay, while bankers have suffered cuts. The latest Financial News City Pay Survey suggests manager bonuses are approaching levels achieved in banking.

Average pay at investment banks has fallen 25% to $295,000 since 2007, according to think tank New Financial, while asset management pay rose 6% to $263,000.

A few managers are making pay cuts. Standard Life has disclosed that its chief executive Keith Skeoch, who is also in charge of its investment arm, has accepted a 20% cut in his potential bonus to £2.8 million, to forestall a shareholder revolt.

The pay of outgoing M&G chief executive Michael McLintock was cut 5% to £5.4 million last year, while bond manager Richard Woolnough had a pay cut of £6.6 million, or more, compared to £15.3 million in 2014, after his renowned M&G Optimal fund suffered hefty outflows.

But overall remuneration is continuing to increase, according to remuneration consultants. Willis Towers Watson believes managers are more likely to seek savings from staff cuts than reduced pay, although lower performance-related pay could ease the strain in the medium term.

The Financial Conduct Authority is reviewing asset management, including an assessment of operating profit margins, which are among the highest in the financial sector. Daniel Godfrey, former chief executive of the Investment Association, believes managers need to be transparent with costs and fees to prove they are not taking advantage of their clients.

Diana Mackay of data provider Mackay Williams said managers across Europe benefit from investors prevaricating before selling funds, even after they have performed poorly.

A survey by the CFA Society has pointed to the sector's crucial role in capital allocation. But Peter Montagnon, former senior investment adviser at the Financial Reporting Council, said of its clients: "They don't see the social value. They see somebody who is actually taking their money, investing it for sometimes rather mediocre returns and charging a rather large fee."

According to Willis Towers Watson, operating profit margins of 35% are common. Schroders achieved a margin of 37% in 2015, according to its latest annual report. Large UK boutique Jupiter Fund Management had a margin of 51% last year, thanks to its profitable UK retail business.

But US consultant Casey Quirk said lower returns and inflows had put operating margins under the greatest pressure since the depths of the credit crisis.

Willis Towers Watson has consistently argued that investors should switch more money to low-fee passive and smart-beta multi-factor funds.

The value of exchange-traded funds hit $3.14 trillion in April, against $2 trillion in 2010, according to data provider ETFGI. A survey of investors by Citi Prime has said smart beta factor funds will rise from $265 billion in 2014 to $1.2 trillion in 2019.